EPA denies Renewable Fuels Standard waiver request

The Environmental Protection Agency (EPA) will not grant a waiver of the Renewable Fuels Standard (RFS) mandate requested by several state governors and backed by ranchers, dairies and poultry operations.
EPA failed to find “evidence to support … severe ‘economic harm’ that would warrant granting a waiver."
Swift reactions to EPA finding.

The Environmental Protection Agency (EPA) will not grant a waiver of the Renewable Fuels Standard[4] (RFS) mandate requested by several state governors and backed by ranchers, dairies and poultry operations.

According to an agency statement released Friday morning (Nov. 16), the denial follows a review that failed to find “evidence to support … severe ‘economic harm’ that would warrant granting a waiver. The decision is based on economic analyses and modeling done in conjunction with the USDA and U.S. Department of Energy (DOE).”

“We recognize that this year’s drought has created hardship in some sectors of the economy, particularly for livestock producers,” said Gina McCarthy, assistant administrator for EPA’s Office of Air and Radiation. “But our extensive analysis makes clear that Congressional requirements for a waiver have not been met and that waiving the RFS will have little, if any, impact.”

Ranchers have long argued otherwise, claiming the government mandate -- requiring the production of 13.2 billion gallons of ethanol (requiring some 4.7 billion bushels of corn) in 2012 and at least part of 2013 (13.8 billion gallons, requiring 4.9 billion bushels of corn) -- is a key driver in high feed costs that have driven many operations out of business.

Joined by grain groups, the ethanol industry has vigorously denied that the fuel is a chief contributor to high feed costs.

On news of the EPA decision, Tom Buis, CEO of Growth Energy,said “granting a waiver on the evidence presented by the obligated parties would have sent the wrong signal the investment community, whose participation is vital to the reducing our dependence on foreign oil, creating jobs in the US that cannot be outsourced, improving our environment and saving consumers at the pump.

“Today’s decision confirms what we knew all along -- the petitioners were wrong in their belief that the RFS caused the economic harm. I commend the administration’s efforts to carefully review the facts and data in this matter. Their findings have echoed the comments of Growth Energy and we are pleased that the most successful energy policy enacted in the last forty years will not be modified.”

Last July, in the midst of massive drought in the Midwest and skyrocketing feed costs for many livestock/poultry producers, a coalition of their backers asked the EPA for a RFS waiver to reduce market pressures. The petition, filed by the National Pork Producers Council, requested EPA administrator Lisa Jackson waive “in whole or in substantial part” the RFS mandate.

At the time, Buis ripped the coalition efforts. “Any objective source will see this argument for what it is -- an attempt to blame corn farmers and ethanol producers for an uncontrollable act of Mother Nature. The facts simply do not add up. The true root of this campaign is an attempt to increase the bottom line of the livestock and poultry industry at the expense of grain farmers.”

Despite the coalition’s request, the EPA was only forced to act after several governors – including Arkansas Gov. Mike Beebe -- requested an RFS waiver in August.

“Obviously, we’re disappointed,” said Matt Decample, spokesman for Beebe, following the EPA decision. “We were hoping to get additional relief for our ranchers who suffered through the tough drought this year. But we respect the EPA decision. We’ll be looking at other possibilities to help out our growers and farmers in the state.”

Prior to denying the waiver, the EPA conducted several economic analyses. “Economic analyses of impacts in the agricultural sector, conducted with USDA, showed that on average waiving the mandate would only reduce corn prices by approximately one percent,” reads an EPA statement. “Economic analyses of impacts in the energy sector, conducted with DOE, showed that waiving the mandate would not impact household energy costs.

“EPA found that the evidence and information failed to support a determination that implementation of the RFS mandate during the 2012-2013 time period would severely harm the economy of a State, a region, or the United States, the standard established by Congress in the Energy Policy Act of 2005 (EPAct).”

Cheers and boos

Among those applauding the EPA waiver denial:

National Sorghum Producers.

“Sorghum has vast potential and can play an important role in supporting American energy independence,” said Terry Swanson, National Sorghum Producers Chairman. “Maintaining the RFS will help to ensure this potential is met by continuing to provide a sustainable market for renewable fuels. The RFS has spurred job creation and promoted growth in our rural economies, and the sorghum industry stands ready to become a critical component in America’s energy solution.”

The Advanced Ethanol Council.

“Waiving the RFS would have done little if anything to reduce grain prices, but would have hurt consumers at the pump and undercut investment in advanced biofuels,” said Brooke Coleman, executive director of the Advanced Ethanol Council. “Congress was right to protect the RFS from specious and politically-motivated waiver arguments, and to include in the program explicit flexibility provisions that allow the standard to adjust to changing market conditions. The RFS is well-designed and is the primary reason why the United States has emerged as the global leader in the development of advanced biofuels. There will be other stalking horses advanced by the oil industry to weaken the RFS, but it is a step in the right direction to put this one behind us.”

The National Corn Growers Association.

“We believe (EPA) administrator Jackson appropriately recognized petitioners did not properly prove severe nationwide economic harm had occurred thereby creating no justification for a waiver of the RFS,” said Pam Johnson, NCGA president. “The ethanol industry plays a pivotal role in job creation throughout the country supporting over 400,000 jobs nationwide. This includes many in ethanol plants in rural America. The RFS advances the use of domestically produced renewable fuels, encourages new technologies and enhances U.S. energy independence.”

Among groups unhappy with the EPA decision:

The National Cattlemen’s Beef Association.

“In light of the most widespread drought to face the country in more than 50 years, the refusal to grant this waiver is a blatant example of the flawed policy of the RFS,” said J.D. Alexander, NCBA president. “The artificial support for corn ethanol provided for by the RFS is only making the situation worse for cattlemen and women by driving up feed costs.”

The NCBA claims “the effects of the refusal to waive the RFS will be felt throughout the economy with predictions of 500,000 head beef cow and 50,000 dairy cow liquidation in the U.S. alone in 2012.”

The National Council of Chain Restaurants.

“The National Council of Chain Restaurants will continue to press the case to policymakers that the RFS is a flawed law which unfairly distorts the market at the expense of chain restaurants, our consumers and everyone else involved in the food supply chain,” said Rob Green, the council’s executive director.